Perfect Competition Essay
The market that we want to use for demonstrating perfect competition is the smart phone accessories industry which including casing as well. What make us to say it is a perfect competition? Firstly, the number of firm is huge enough to say it is numerous. For example, we can see at least five stalls of vendors selling smart phone accessories in a shopping complex, it will be included Iphone, Samsung, HTC, blackberry.
Imagine one shopping mall having ten stalls of the respective vendors, which means in our current city, Petaling Jaya there will be around hundreds of stalls selling smart phone accessories, not even to mention about the stalls in the whole Malaysia. Secondly, the products of every stall are quite similar and close to identical as long as you can see the same type of accessories selling in different shopping malls which can be explained by the existence of the homogeneity of product. Thirdly, the barrier to entry is very low as we can open a stall very easily and we might shut down the stall anytime.
For example, the owner of the firm that we surveyed said that he has tried to open as many as possible stalls in a single shopping mall, but in the following day the stall can be closed or moved to other place because there is no barriers prevent firms from leaving the market, and he had closed three stalls in different places because the revenues of a stall per day is not enough to cover the total cost, hence, he chose to close the stall as he was using a pay and sell method which means you open the stall one day, you pay for one day of rental fees.
However, the employer of a shopping complex will sign contract with those renters. Undoubtedly, the firms cannot quit anytime but what we mean by any time is short term such as three months. Thirdly, we can simply get information of phone casing like internet, hanging around in shopping malls, and we can know the price of same product but in different places. Besides, each one of the stall is negligible portion of the whole phone casing industry, each stall decision has no effect on the price of the products. Consumers will not care from which firm they buy the phone casing.
For instance, when we see a beautiful phone casing via facebook advertisement or other online shopping websites, we will not care about which firm is the casing from, which country it from and other small problem, we will just look at the price, feel that it is reasonable then press “ORDER” or “PURCHASE”. Example in real life: when we are hanging around in a shopping mall, we will see lots of phone casing stalls, after we find a phone casing that we interested in, we will start to compare the price with other stalls, after that we will buy from the stall with lower price.
This shows that we don’t care which firm we buy from but the price of the phone casing. Based on our survey, we can see some difference between those smart phone accessories although they are in the same category as “Perfect Competition”. For service attitude, some of the stalls are trying to employ more female promoters to attract more customers as from the results we can get from websites, there are more male consumers using smart phone that means that the market for smart phone accessories is more tend to male customers.
Besides, the sales systems for the stalls nowadays have also improved a lot such as changing the packaging of their products and start to use bar code system which give a uniform price that replace the old sales system such as customers asking for discount for their products, which is a more messy sales system. Yet, some stalls still remain the system as that is the way how they attract consumer.
Consumer usually like negotiate, they feel satisfied if their negotiation works. Nonetheless, information from a relative of our group member which is working in this smart phone accessories area told us that some of the vendors usually give false information. Why we say like that? Usually we buy an item from the stall we will ask where is it from, and the promoters will tell us that it is from those ‘fashionable’ country like Japan, Taiwan.
The sad case, really sad case is that the stocks are mostly and probably all of them from Thailand or China which provide lowest cost of smart phone accessories in the world. Gratifyingly, there are some stalls works creatively like D. I. Y phone casing such as those “blink blink” casing and using their own photo and create a personal phone casing by ourselves. Apart from this, for normal assumption, we will say fish is fish, phone casing is phone casing, but in real life it shows that it is NOT! Why can we conclude this?
In real life, fish can be salmon or it can be sardine, these two types of fish are different level and also different price, same goes to phone casing, some consumers which is affordable will tend to get those casing which stated as “original” casing, which is bought from telecommunication store like MAXIS, DIGI, MAC MACHINE and so on, but the rate we buy from the store and normal stores is totally different. In telecom store, a normal casing may cost you about sixty bucks which you can buy from others stall with fifteen bucks.
This is where we say the products are not totally identical because in real life the consumers will consider about “originality” of the phone casing. Furthermore, firms usually try to differentiate with other firm with their service and skill of the sales crew. As an example, one of the ordinary Smartphone accessories will be the screen protector and to complete a fine screen protection needs specific technique and practice, consumer will come back if you do well in this aspect because it is very hard to have experienced sales crew to perform well-trained skill for applying the screen protector.
Some firm allow consumer to try the Smartphone casing until they choose their most favorite one but some firm will give you a glance if you just move or touch the casing. In addition to this, there is a trend among Smartphone accessories stores. Consumer will check any updates among the stores in a shopping complex and updates their costume of their phone as well. Some stores may be recognized as outdated since their products remain the same for a whole month and the consumer will not consume at the stores anymore.
Everybody like the latest stuff, thus competitions among little firms have to follow a lot of requirements from consumer to maintain or operate their business. In the nutshell, our group’s observation about how different firms differentiate their products from the competition is that they will tell the consumers the origin of their products, which some of the casing is from Thailand, China or other country, and then they use this fact to set the selling price and tell the consumers the difference of their products with other firms. Monopolistic competition
ChaTime is said to operate under conditions of monopolistic competition because it satisfies 4 requirements. Firstly, there have a lots of different brands undergo bubble milk tea business and create some kind named “Bubble Tea Joints” in Malaysia including ChaTime, Each A Cup, Ochado, Cool Blog, 27?, Gong Cha, T- Blogger and just to name a few, there are far more unique bubble milk tea stores. Different area has different dominant bubble milk tea bubble stores. Some bubble milk tea stores are national but some of them are just regional.
This is an example of the difference between national and regional. All of our teammates come from the same place, Johor, as we can see, some of the bubble milk tea stores such as T-blogger that existing in Johor did not exist in Petaling Jaya while part of them did exist such as ChaTime. The following condition is the freedom of exit and entry as all firms can go in and out easily. For example, there are many different brands open a franchise nearby ChaTime. The business of ChaTime did not restrict any sprouting business of bubble milk tea store nearby.
Competitions are allowed among the area. The competitors can have the same type of products and similar price but differentiate themselves with packaging and store environment. There was no definite and rule for same line business, as well as no limitation for any type of specific business. The law is not disobeyed if all of the shops are selling bubble milk tea along a street. Furthermore, all firms can go out easily. As long as the firms find out they have difficulties and obstacles for continuing operate their store, they can shut down one of their stores and quit from the competition.
Moreover, customers can get information from ChaTime easily such as price or any promotion. What means by easily? It can be explained with easy access, not only consumers can get clear information from their franchise stores; even any details can be obtained from their official website according to different locations. Nevertheless, they present different service to impress every consumer as well as packaging and environmental atmosphere. Different firm has their own unique features designed for their store such as ChaTime use purple color as their theme color.
The store of ChaTime located in Paradigm Mall is shown as below. The location is at the corner of escalator, if consumer use escalator, it can be seen. ChaTime will not locate in somewhere else dodgy and very hard to seek, they prefer to expose to public and usually every shopping complex or nearby the mall has their outlet. Lastly, ChaTime is selling same products as others but it tries to differentiate their products by quality, packaging, supplementary services offered.
Based on our survey, the crews of ChaTime usually show passion and initiative attitude when we show up our face to counter to make order. Greeting phrase such as “Welcome! What you would like to order? ” and after you have ordered your drink they will concern about the sugar level as well as the ice level and these additional caring service is free of charge. Sometimes we request for less ice when we buy drink and usually being charged with additional RM0. 50 or RM1. 00. The crews of ChaTime wear their uniform tidily and the whole set of the uniform give consumer a clean image.
The range of the races of ChaTime’s crew is wide including Chinese, Malay or some “Mixblood” but they show some service and attitude. Based on our field survey, the quality of ChaTime’s bubble milk tea is good. Original red tea is used as the base of the milk tea and it make the taste of the bubble tea smooth and mellow. Every cup is refreshing and the taste gives consumer a very good impression for supporting ChaTime. The price is subject to the size of the drink you choose. The variety of cup size is not many, consumers can only upsize from regular to large and their price difference is RM1. 0. As a professional consumer, buying the large size of drink is definitely more worthy but correspondingly marginal utility decrease. Depends on the individual needs, what they desire for, they want worthy product or just sheer satisfaction. Comparison between ChaTime and Each A Cup We have done some field survey and self-experienced at Each A Cup. Each A Cup is one of the bubble milk tea monopolistic competitors as it fulfills all the conditions of monopolistic competition. It usually having lower price than other bubble milk tea joints.
As we have mentioned before about the additional caring service, at Each A Cup, there is additional charge. We have discussed the reason for both of the bubble milk tea stores has different price is due to different quality, packaging and service. Mostly Malay lady are hired by Each A Cup while they actually did not offer service but just doing their job. After we done our order, then they will collect money from us then get our drinks ready. No more is achieved except the bubble milk tea. Unlike ChaTime, the conversation started with “Nak order apa?
Nak Pearl tak? ” (What do you want to order? Need to add pearl? ) Well, this type of conversation I can simply get from night market and is really not a reason for me to consume Each A Cup since the taste is not extraordinary amazing but just normal. We have witnessed the process of making the milk tea, they added white powder (something like coffeemate) and it verified by the powdery taste. Regarding to the picture shown above, the design of Each A Cup apply white color base with orange pastel.
The promotion stand was right in front of the counter, consumers are very easily attracted by the promotion. Does the store give you a positive presentation for purchasing a cup of bubble milk tea? There is another common difference between two of the bubble milk tea stores. Both of the stores treat their regular customer with some special gift. ChaTime released member card for recording down the drink track with points. As an example, consumer will get 7 points for purchasing a cup of drink. Hence, the card holders can redeem their gift with the card’s point.
While for Each A Cup’s frequent consumer, they give out a stamp card as shown as below for every purchaser with expiry date. Consumer can get a free drink after they collect ten stamps; it means that they need to buy ten drinks to get a free drink. This is how the big company boosts up their sales. However, for bubble milk tea drinkers, those cards are just little gift and reward for their consistent support. In our opinion, the cards do have pros and cons between consumer and firm, but if there is no unwilling deal, bubble milk tea will be still a nice and popular choice for having a drink.